Our nation and our world face an undeniable climate crisis. We are already experiencing firsthand the impacts. Childhood asthma rates have soared, and many of our neighbors have lost or seen significant damage to their homes from climate change induced storms.

I applaud the Governor and the Legislature for leadership toward making Massachusetts a national leader in energy efficiency and environmental conservation, and toward adapting to the realities of climate change.

But we need to go further. I believe that one crucial step we can take as a Commonwealth is to enact comprehensive environmental tax reform. As it currently stands, we heavily subsidize pollution by neglecting to charge for the true cost of harmful emissions. It is time to end those subsidies.

Our economy should align with our values. As it is written today, our tax system puts more of a burden on the activities we want to encourage – work and investment – than it puts on pollution. By levying a tax on harmful carbon dioxide emitted into our air, we can raise enough revenue to reduce the income and sales tax burdens for Massachusetts families and small businesses.

And the benefits don’t end there. We don’t need to choose between strengthening our economy and protecting our environment. Studies have shown that commonsense environmental tax reform will actually increase jobs and add to our economy; it will create over 10,000 jobs in Massachusetts and increase our state’s GDP by $450 million per year while reducing our carbon emissions by up to 12 percent. And, we can do that without adding to the cost of living for the average Massachusetts family.

Indeed, we would pay a far higher cost for inaction. And that burden will fall on those least able to bear it, since climate change disproportionately impacts lower-income families and communities of color.

Massachusetts is uniquely positioned to step forward and enact comprehensive environmental tax reform. We have the political will to be a national leader. We were the first state to make health care a human right, the first state to say you can marry the person you love, and our energy policy is far ahead of much of the rest of the country.

Change is always difficult, and we can count on special interest groups rooting for us to fail. But with the leadership of a bold, progressive Governor – the kind of Governor I pledge to be, we can keep leading the nation in responsible, forward-looking public policy.

Discuss

One of the best ideas I’ve seen for a carbon tax came from James Hansen. He said we should tax carbon fuels at the point of extraction, and distribute the proceeds of that tax directly to the people so that they won’t feel the pinch of the increased costs. Those consumers who choose a low-carbon lifestyle – solar power users, electric car users, etc – would reap a small windfall by receiving the payment without having to spend it on increased costs. In essence, the market would spur self-correction with regard to carbon pollution.

I don’t know if that could be applied at the state level, but it’s certainly worth a look.

implementing a carbon tax in Massachusetts is VERY feasible, and in fact our economy turns out to be a perfect place to enact environmental tax reform. Massachusetts produces no fossil fuels of our own, which means that all the money we spend on oil, coal and natural gas ultimately leaves the state. That’s a big part of the reason why Environmental Tax Reform has such great economic benefits for Massachusetts – we’re taxing bad stuff that we need to import into the state and in turn reducing taxes on good stuff, like sales and income, that are happening here.

So while we can’t get to the point of extraction, which would be a great way to do it for federal or international carbon taxes, we can do a great deal here in MA.

It sounds good to tax carbon fuels at point of extraction, but Don Berwick is proposing a state tax. Please correct me if I am wrong, but Massachusetts doesn’t have any oil wells, gas wells, or fracking.

I think that question is essential for any of these priorities we will hear from candidates. I have long agreed that a carbon tax is the best policy solution in an vacuum, as is single payer for healthcare, but there are a host of interests that will be fighting against this reform. How we beat them and/or bring them to the table will determine the answer. Eager to hear from the candidate on this.

Joe Avellone is for a carbon tax as well. He wants it to be revenue neutral.

The problem with this is that making something revenue neutral in the aggregate (impose carbon tax, lower other taxes) does not mean it’s revenue neutral for all. People in rural Mass. with long distances to cover in pickup trucks could be net losers. It may be that we need to go that way to influence behavior in ways that will protect us from disaster. But we need to evaluate carefully how the impact will fall.

Regional disparity is something that those of us who have been advocating for this Environmental Tax Reform proposal have been paying close attention to and it’s something we are committed to working out. In British Columbia, where they have implemented a revenue neutral carbon tax residents of rural communities get an extra dividend check to ensure that the tax ends up regionally equitable. We’re not sure exactly what the mechanism will look like here in MA but it’s something that can be addressed and will be addressed.

For example, rural communities pay far less in gasoline taxes for each state dollar of expenditure on their roadways than urban and dense suburban communities. Under the current scheme, people in urban mass are net losers on the gasoline tax-roadway expenditure equation.

Moving forward, there’s no reason why some of that revenue couldn’t be used to invest in energy efficiency in rural homes, thereby reducing their heating bills and their exposure to the pollution tax.

But I also liked Reich, Patrick and Obama too. I need to know from the candidate and/or his supporters why he thinks he can win and more importantly how he plans to govern. These are important questions, and while he fails no litmus test and exceeds most expectations on stances on the issues, I have concerns he is a neophyte when it comes to the legislature. Need those to be shored up before I can commit. I definitely want him on the ballot and in every debate, his presence can only serve to make the other candidates better at worst, and at best he wins and can implement his vision!

since this is in my wheelhouse. Disclaimer: I am an elected delegate pledged to support Berwick at the convention, though I in no way speak for him or his campaign.

1. Let’s be clear what pollutants we’re discussing. CO2 is the obvious one, but there are other air pollutants that are important, including but not limited to:
* NH4 (methane)
* NOx
* SO2
* PM10, PM2.5 (particulate matter)
* Hg (mercury)

2. Costing them (setting the tax rate relative to the harm imposed) is possible but non-trivial. There’s obviously some degree of economics meets ecologics meets politics. It gets a bit trickier because some pollutants cause local harm, for example SO2. Carbon dioxide, on the other hand, is strictly a global pollutant in this context.

3. Estimating the emissions from common sources (power plants, industrial burners, home boilers, automobiles) isn’t that tricky but would require some work.

4. RGGI! Regional Greenhouse Gas Initiative currently imposes a cap and trade fee on carbon emissions from non-tiny electric generating stations in New England, NY, DE, and MD. Only electricity generation though — not industrial users, not residential and commercial heating users, and not vehicles. And, of course, it’s strictly CO2. RGGI *could* be used on those other locations too though. For natural gas heating consumption, it would be imposed by the LDC (the gas company) before you ever see it and it wouldn’t be on the bill — just like RGGI isn’t directly on your electric bill now. For home heating oil, same thing — the oil company would pay the tax upon delivery and bake the fee in the price of your oil. For motor vehicle fuels, again it would be baked into the price, just like gas tax is now. For CO2, MA could relatively easily roll this out because a structured and established system is already in place. Note that RGGI emissions permits are currently about $2/ton, and the system is designed so that the price works upward to about $10/ton by 2019. To put that in perspective, every $1 in RGGI would increase the price of gasoline and home heating oil a penny a gallon, or roughly $6/year for heating (I’m assuming 600 gallons per year, this year maybe more!). Natural gas, while using different units, emits about half the CO2 per MMBtu, so homes with natural gas heating would pay roughly half the fee that otherwise identical homes with home heating oil would pay, say $3/year. Again, those estimates are per $1 in RGGI, so at current RGGI trends, it would be $60/yr for oil, $30/yr for natural gas, and an additional $0.10/gallon for motor gasoline in 2019.

5. Obviously, the RGGI price is a many-state result. In theory, MA could charge more, or could simply have a higher CO2/ton rate for non-electrical emissions.

6. Of course, MA could reduce other taxes in concert, either directly related to the fuel or wholly unrelated. For example, if MA didn’t want to change the total tax on gasoline, it could reduce the state tax a penny for every $1/ton CO2 fee.

7. Where to spend the money should we not reduce taxes an identical dollar amount? Hey — that’s for the lege and the guv to decide, not me! I’d probably spend the money on remediation and avoidance. CO2 money from motor fuels? We’re spending it on sidewalks, bike infrastructure, and mass transit to allow people to transition away from paying the CO2 fee associated with their autos. CO2 money from home heating oil and natural gas heat? We’re using it to subsidize home energy retrofits and transitions from heating oil to natural gas, to help homeowners reduce the CO2 fees associated with emissions from heating. CO2 fees from electric generation? The state currently spends most of that money on electric energy efficiency programs, a great way to help people reduce their electric bills and their CO2 emissions.

8. Setting the dollar amount is really hard. Set it too low, and you don’t get any behavior change, not much revenue, and little opportunity to help our society transition away from carbon emissions. Set it too high and face torches and pitchforks, and lots of carbon intensive activity simply leaving the state (and therefore not actually reducing its carbon emissions). My suggestion is to start low but to build into the law an automatic increase over time. We did this with our electricity Renewable Portfolio Standard (RPS). Every year the law requires another 1% to be renewable instead of fossil-fuel based. Forever. The legislature would have to act to change (or eliminate) the increase. This means the lege isn’t faced with a difficult vote every year, and their inaction works in the favor of rolling out the program in a slow, steady, predictable manner.

Methane is CH4, not NH4, that’s Ammonium, the positive ion of Ammonia, NH3. If my memory serves, Ammonium can’t exist on its own, it needs a negatively charged ion in a compound to remain stable, as in Ammonium Nitrate, NH4NO3.

3. Estimating the emissions from common sources (power plants, industrial burners, home boilers, automobiles) isn’t that tricky but would require some work.

Not even necessary to estimate emissions. Tax the input. There is a linear relationship between what and how much goes in to how much pollutants come out. So progressively (linearly) tax large consumers. The linearity can be modified by burning differently or scrubbing or carbon capture or what have you. But the need to estimate the output isn’t, strictly speaking, there if we can accurately quantify the input.

I would like to see, ultimately, a tax on pollution that rewards capture. If you burn 10 tons of coal but can produce (nearly) 10 tons of the carbon you turned it into then you pay no tax. If you can’t, you do pay the tax. That’s not even a tax. That’s a shipping and handling and storage fee…

For large point sources, the EPA already tracks emission quantities at the point, typically at the stack (output), not input. This is because you’ve got inputs which range in their purity, and you’ve got “scrubbers” that take the pollutants out, when they’re operating correctly. There’s enough variables, and few enough point sources with large enough revenues that it’s best to actually measure output.

For CO2 for coal plants you’ve got it about right. For natural gas plants it can be a bit trickier though, because unburned natural gas (methane, mostly) is far more potent a GHG than the emissions from burned natural gas (CO2 and H2O). And, for non-CO2 pollutants, see the paragraph above.

For autos and home heating systems, combustion efficiency is really important, as are a number of other factors. In those cases it seems to me to be far more efficient to tax based on an estimate and the inputs [as you suggest], but also to enact much stricter standards, so that new motor vehicles and boilers meet high standards for complete combustion and filtering, and that these bits of equipment are regularly inspected (autos once every X years, and boilers every time there is a service call).

We’ve been thinking about a couple of ways that this proposal could intersect with RGGI.

In general, most economists and policy leaders believe that a price on carbon should be uniform – that we shouldn’t attach a higher carbon perice in one sector of the economy than we have in another sector. That is especially true since in some places different sectors are directly competing with each other (for example, electric cars compete with combustion vehicles, electric heat competes with oil and natural gas heat, etc). So in the long run one carbon price is preferable.

Two ways we could get to a uniform price on carbon. First, we could charge a uniform carbon tax but allow the utilities to deduct the cost of their RGGI allowances from their tax liability. But another strategy, and one I prefer, would be to expand RGGI into all sectors of the economy (most importantly transportation) and then put the revenue-neutral carbon tax on top of the now uniform RGGI program. That would not only create a uniform carbon price, but an expanded RGGI transportation program could raise some revenue that could be used on transportation infrastructure like mass transit, bike lanes, etc etc. while keeping the carbon tax revenue neutral.

but economists don’t get bills passed. We don’t have a uniform carbon tax now with RGGI, and we didn’t before that (when motor gasoline had one tax, home heating fuel was tax exempt, and pollution-related electricity taxes and fees were another matter altogether).

Furthermore, CO2 isn’t the only pollutant that comes from burning a fossil fuel, and the other pollutants vary widely. For example, if you burn coal, you’re also emitting SO2 and Hg and particulates. If you’re burning natural gas, you’re emitting none of those things. These pollution differences by fuel type can easily result in different sectors paying different fees per MMBtu — and that’s okay.

As for the last paragraph, you bet. Lots of ways to skin the cat. But, all of those methods to abate carbon emissions — home retrofits, mass transit, etc., cost money. Why should we artificially hamstring ourselves to the RGGI allowance revenue to pay for that? Why not take Governor Patrick’s advice and figure out what we want, and then how we’ll pay for it rather than look at how much money we have and then decide what we need?

There is a considerable body of work valuing environmental externalities going back to the 90s. In Massachusetts externalities valuations are used to value the costs avoided by energy efficiency versus electricity generation.

No need to reinvent the wheel, in other words, and the basic complexities are well known.

There is a considerable body of work valuing environmental externalities going back to the 90s.

There is considerable work, but the range of values that peer reviewed, respected authors come up with is still quite wide. I’m not talking like somewhere between $12 and $14/ton. I’m talking like somewhere between $10 and $300/ton. The scientists involved are really good at getting the direction of the effect right, but the magnitude is another thing altogether. The “reinventing” is the political, not the scientific.

I’m not arguing against doing it. I’m arguing that, ultimately, the scientists will put a rather large range of prices which are reasonable, and then the politicians will choose a price which may or may not be in that window, and that both parts of that process are important and real.

as the old joke says. (And the scientists are likely to be economists informed by life and physical sciences and engineering.)

I only want to emphasize that this is not some new theoretical idea, as some who are unfamiliar with it might assume. It is a well-established economic tool that already influences energy policy. Refining it and applying it more broadly is a logical next step.

In the mid-1990s I went to the first joint conference of Environmental Health and Safety people with IT people. It was quite interesting. At lunch one day, I was sitting with folks from 3M who talked about one of their plants where there were local taxes on some pollutants released into the environment. Over time, what happened was that the locality saw the pollution taxes as a revenue stream and actually began to make it difficult for companies like 3M to reduce their wastes, the subsequent pollution releases, and the amount of consequent taxes 3M would be liable for.

I don’t know if Dr Berwick’s proposal will do the same thing but I suggest that it should be crafted with this possibility in mind.

We have to think differently about what we are doing if we want to reduce or reverse climate change and other ecological disasters now building up to come crashing down on our heads. I like the idea of zero emissions as an approachable goal and have just published a diary here about it ( http://bluemassgroup.com/2014/02/net-zero-is-not-a-practical-goal-in-new-england/ ). Just thinking that idea through will lead to a lot of savings, even if we can’t reach such a stringent measure as zero.

Over time, what happened was that the locality saw the pollution taxes as a revenue stream and actually began to make it difficult for companies like 3M to reduce their wastes, the subsequent pollution releases, and the amount of consequent taxes 3M would be liable for.

I find it hard to believe that federal law (Clean Air, Clean Water) or state law (typically, the State Implementation Plan, or SIP) didn’t trump local ordinance on what 3M could do. I don’t know the details, but I’m skeptical when I hear stories like this because it taps right into the big bad government instinct, and the blame-somebody-else instinct.

What states are encouraging smoking? Drinking? Choosing a low MPG vehicle? Do you know of an example where a state government is actively encouraging detrimental behavior that is taxed, to get more tax revenue? I don’t.

I spend almost no time in New Hampshire. What does it mean to “push liquor sales”? Are we talking like advertising in the Sunday circulars, or are we talking legislation making it more difficult for Alcoholics Anonymous to operate “push”?

The signs every 50 feet on the highways, proudly proclaiming: “NH Liquor Store – OPEN SUNDAYS.” Used to be a very big deal until MA allowed liquor stores to open on Sunday. And check out the designated exits for these socialist enterprises.

Or just visit the website, which will tell you all about their February specials. “Always Great Value, Always Great Selection!”

Or read about the stores:

Over the years, New Hampshire residents and those from surrounding states for miles around have chosen to shop for their wine and spirits at our conveniently located New Hampshire Liquor & Wine Outlet stores. This has not happened by accident, but by design, as the State Liquor Commission aggressively pursues a strategy that provides you with the best possible value and the most pleasant shopping experience.

(emphasis added)

“Are any of your stores open on Sundays?”

Yes. ALL of our New Hampshire Liquor & Wine Outlet stores are open on Sundays. Sunday store hours vary by location but are generally between 10:00 am and 5:00 pm.

Unfortunately, even record sales in 2013 did not hit the aggressive revenue target. Sadly, people couldn’t afford their booze or the gas to drive to the stores from out-of-state (half of customers are from outside NH):

“A dismal winter combined with the worsening overall economic conditions and gas prices also had an impact on sales” in fiscal 2012, and carried over into fiscal 2013, said George Tsiopras, the commission’s chief financial officer, in a statement.

It’s a big problem, since NH has a budget of $10.75 billion over the next two years, with only $2.7 billion of that from the general fund. The $270 million anticipated from liquor profits represents 10% of general fund revenue.

but it’s clear they’re not just having it for sale, they’re going all out to maximize liquor revenue so they can avoid having to come up with revenue any other way.

I imagine private stores would behave about the same as far as promotion. I’m no prohibitionist but it’s expected that a private business making its money from selling liquor would want to maximize sales. From a state government it’s just unseemly. To their credit, though, they do have tough DWI laws.

1. They lure attract the MA resident to their “conveniently located” liquor store IN A REST AREA on an interstate.

2. They provide plenty of parking so that the mark has plenty of room and space to savor his or her new libations.

3. They post a cruiser with a breathalyzer just south of the store on the Interstate.

4. Bust the mark for DWI and collect the fee. The MA plates make it easier to spot the desired target.

If MA were just a bit “smarter”, MA could snoop the credit and debit card records of MA residents and identify taxable items bought in NH — then demand payment of the sales tax on those items, together with a “convenience fee” to reimburse the state for so nicely assembling the taxable-purchase package.

There was a period when unmarked MA State Police cars would park in NH liquor store parking lots, and the troopers would write down and radio in the license plate #s of MA cars. Then, when those cars drove back into MA, they’d be stopped and searched, and the drivers fined for not paying the tax on their booze. I don’t remember exactly why the practice was stopped, but I think NH made a stink about it.

Unless MA and NH had an agreement of some sort I wouldn’t think that it would be legal for MA troopers to sit at NH stores. If they do that what’s to stop MA from trolling the parking lots of the Daniel Webster Highway and the Rockingham 28 strip retailers to enforce the sales tax in a similar fashion? I think I’m glad they don’t. That sounds way too much like customs enforcement for state borders within a union.

Unless MA and NH had an agreement of some sort I wouldn’t think that it would be legal for MA troopers to sit at NH stores.

Of course it’s legal, up to the moment when the state troopers are asked to vacate the property.

What I don’t get about this myth/story is this: so lets say I go to NH and buy 10 cases of beer and throw them in the trunk. Yip, that’s tax evasion. I’m driving home, a Mass Statie pulls me over. Can he get in the trunk without a warrant? Couldn’t I simply refuse him access to my vehicle?

The cops know that A) You bought a bunch of booze in NH, and B) you drove directly across the border into MA. They’d do their usual thing of asking “OK if I look in the trunk?” You say “yes” and you’re busted. You say “no,” and they phone the judge and get a warrant, and you’re busted and have annoyed them.

It seems that since MA stopped taxing liquor, booze revenues in NH have lagged behind increases in their state budget. I wonder what they’ll do next – legalize prostitution in border towns?

Do they sell beer in those state liquor stores? I’ve never been in one, and they seem to sell beer in pretty much all the stores up there…

So let’s say they know (a). They know that the boxes with booze labels actually have booze in them, and they weren’t open boxes with party supplies, lemons, limes, and ping pong balls that we put in spare boxes because they’re easier to carry.

Do they know (b)? The game is that one officer writes down my plate, and another officer — a mile or more away — sees my plate and pulls me over. They haven’t been watching me continuously.

So yeah, I’m sure lots of folks say “yes” but my question is this: can the Mass Staties get a warrant for the situation we’ve just laid out?

NH has no authority to collect taxes on behalf of another state, read Massachusetts. You aren’t expected to pay your tax liability when you purchase those ten cases or even when you cross the border. Furthermore it has been argued that as a “use tax” the liability is to the State in which those ten cases are consumed. So no, you are not evading taxes by purchasing and throwing those ten cases into your trunk. You are evading them when you fail to file a use tax in Massachusetts regarding the purchase of those libations so I doubt it would matter if he looks in your trunk.

I don’t have any figures for NH DWI revenue, but I imagine it’s far smaller than liquor sale revenue. Plus I think they have mandatory jail time, which must eat a good part of the fine. And you’d think word would get around if people from Mass. were being targeted by police after shopping there.

Do you really think people are getting smashed in the parking lots of the state-owned liquor stores? My local liquor store here has a big parking lot; never saw anyone drinking in it.

I lived in a border town (Dunstable) during a time when tensions were high. The state tax situation of the Pheasant Lane Mall was far more contentious than the liquor store question (which everyone just rolled their eyes at).

Nashua officials seemed to intentionally rub salt in the wound by proposing and building a “convenient” entrance and exit ramp, again literally at the state line, that fed northbound traffic on Rt 3 into the parking lot and provided equally convenient access from the parking lot back to Rt 3 south.

Massachusetts argued, with some justification I think, that the Mall was intentionally soliciting the illegal avoidance of property taxes.

An irony, of course, is that the sticker prices of virtually EVERY item I looked at (I used to make a hobby of it while my wife shopped) was EXACTLY 5% higher in that mall than the price of the same item in a Massachusetts store.

MA residents apparently prefer to pay that 5% to the store owner, rather than the state — I never saw ANY actual reduction in price to the consumer.

I was not aware of it, but I live so close to the border that I shop in NH not so much because I’m bent on avoiding the tax as that’s where the stores are. Then again, maybe some do philosophically prefer to pay more to a business than to the government.

Your point about the convenient route 3 exit is interesting. It sounds like MA didn’t want NH to do it, but you have pretty much described Exit 36 which is on the MA side.

because I remember that whole area behind what used to be Shakey’s Pizza being overgrown with weeds for years. My point being, that I don’t think the sales tax had anything to do with it being located there.

The exit is in MA. I find it very convenient for getting to that bunch of stores in Tyngsborough just south of the state line. I don’t go there as much since Trader Joe’s moved up to near Toys R Us. TJ’s apparently moved so they could sell wine. Much less convenient for me, so I don’t shop there any more. Notice that there’s no exit from Rte3 South to the mall.

If you look at google maps in Satellite view, you can see the odd corner of J.C Penney that they cut off because it was in MA. (For some reason the Map view incorrectly shows the state line going through the store, and Sears, too.)

Tom’s right about the prices at that mall being 5% higher than at, for instance, Burlington Mall.

because I reviewed my comment under “My Comments” and it still says “0 Replies”, so yours must be in response to Christopher’s comment. And I bet that this will be at the same level of indentation as kirth’s comment.

It wasn’t the indentation that bothered me so much as my comment appearing to be a reply to yours, when it wasn’t. If this keeps up, we’ll have to start quoting the comments we reply to, just to have it all make sense.